How to trade the Nonfarm payrolls

How to trade the Non-Farm Payrolls. Many ask themselves how do you handle such volatility. Well I guess non farm payrolls is more for the experienced traders, the volatility traders and the more “bavado traders” . For traders that make consistnt money with systematic repetitive trades during the course of the month, the Non-Farm Payrolls, they will normally sit out of the session.

Having said that, there are safe ways of trading the Non-farm payrolls. You need to be extremely disciplined, and try not get lured by the gamble of having a little “punt”.

First will explain to you How to trade the NonFarm Payrolls, then i will show you three examples, of a successful trade and two different types of No trading sessions.

1) How to trade the NonFarm Payrolls?

This is a strategy that I have used and have found that it is useful. It works on understanding what the traders’ and analysts expectations are and see if the data is better or worse than expected.
Volatility trade, trade it with a currecy pair: eurusd – liquid
gbp/usd
gbp/jpy – for those looking for a big break out.

so First you analyse the data.

Then you gather what the analysts expectations are in the market. this can be found on bloom berg or a forex news site

then you set your self a .20% deviation from the consensus, if this is broker you will get a certain reaction.

If The Data comes out worse or better than expected the currency pair you are trading will move strongly

Ok so lets run through an example.

During the Non-Farm Friday session there are two economic data that will affect the trade, the Non-Farm Employment Change and the Unemployment rate.

Price Action- Three Black Crows

This is a very simple setup. No indicators needed just simple price action. You do need to know your candlestick patterns. I will give you all the patterns you need to know and their explanations. This spread betting strategy is applied to BARCLAYS spreadbetting shares , but it is a pattern you can also apply to Forex spread betting, commodities, Indices.

The main setup is to look for prices moving higher in a minor or major price trend. When the retracement occurs and the retracement is a 3 black crow candlestick pattern that stalls on the Moving Average (10 – 20 – 50) this is a good indicator to buy the shares. See the spreadbetting example below:

The buy signal after the 3 black crow candlesticks is stronger if followed by a bullish pattern like the bullish harami pattern:

The down trend stalls, runs into a sideways movement then followed by a breakout.

here is another spread betting example of the three 3 black crow candlesticks followed by a Gap up pattern. If the Gap up window is not closed this becomes a support and short term bullish pattern.

A variation of this spread betting system, is to look for the three black crows on the daily chart. If the forth day does not fall further and a sideways trend occurs on a 15 min time frame. In the bigger picture you will see three black crows followed by a Bullish Harami. On the 5th day look for a break out from the previous day’s range to the up side.

what does it look like on a daily chart:

As prices move higher use your money management to move your stoploss higher.

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Heiken Ashi and Ichimoku cloud

Advanced Spread betting system- Heiken Ashi and Ichimoku cloud

I found this strategy on Forex factory. I have tried it on smaller time frames, but will run the spread betting system on a higher Time frame. This system is part of the Advanced spread betting system as those who apply it should have some understanding of the Ichimoku Kinko Hyo (Ichimoku cloud) charts and the Heiken Ashi charts. I have added a brief explanation in the technical Indicator section.

Description
This is a relatively easy spread betting system. It requires a lot of patience, as more indicators you use the greater the patience needed for the signal to occur. I applied this strategy on the GBPJPY.

Spread-betting long:
The signal: Wait for the Heiken Ashi candlestick bust be above and close above the Kumo. Once the Tenkan Sen has crossed above the Kijun Sen; The Chikou Span must be above the prices and heading higher. Instead in the cloud, the Senkou Span-A would have crossed above the Senkou Span-B; Heiken Ashi candlestick must be positive blue candle.
For those that have a higher risk tolerance they can ignore the Chikou Span.

Spread-betting short:
On the other hand we have a spread bet short which is completely the opposite to the spread betting long. Entry signal would be:
Wait for the Heiken Ashi candlestick bust be below and close below the Kumo. The Tenkan Sen would have crossed the Kijun Sen to the downside; the Chikou Span must be below the prices and heading lower. Instead in the cloud, the Senkou Span A would have crossed the Senkou Span B to the downside; Heiken Ashi candlestick must be a negative red candle.

Your exit strategy:
You will exit either when your money management rules, tell you. Do not risk more than 2-5% of your account or if the trade goes your way wait for the Tenkan Sen to cross the Kijun Sen in the opposite direction.
This is a trend following strategy so you want to try stay in as long as possible.

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Time frame: 1Hr
Tag: GBPJPY
Indicators used : Ichimoku Kinko Hyo (Ichimoku cloud) and the Heiken Ashi charts.
Charts used: GBPJPY
Type:Trend
Timeframe of trade: Swing
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Price Action-1-2-3 Trade system

Price Action–1-2-3 Trade system

This strategy is a very simple and logical strategy used throughout the trading world. The Price Action 123 Spread betting Trade System takes a new trade when prices fail to make new highs or new lows. The Spread betting example below is set on a 4HR chart but this can be used on any time frame. I have also pictured this strategy on the EURUSD. This is my favourite pair and the forex spreadbetting pair I specialize in.

There are no indicators, it is all price action. This is considered a reversal strategy.

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Summary
Time frame: 4HR
Tag: EURUSD
Indicators used : None
Type: Price Action
Timeframe of trade: Swing

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Entry Rules:

Entry occurs after a trend has been underway for sometime, and prices have reached extreme levels. These levels will no longer be sustainable, and prices will fail to make new lows or new highs.

Below is a spread betting example of the Price Action–1-2-3 spread betting system.

Spread-betting short:

This is opposite to the above entry signal; instead prices have reached new highs and fail to move higher, interrupting the up trend.

A) 123 – Lower High
After prices have been making new highs and higher Lows, the new highs are not sustainable anymore and the highs make a lower high (3). Here the bears have overpowered the bulls and it is time to trade short unless you a conservative trader that you wait for prices to bear point (2).

B) 123- Double top.
Similar to the above scenario, you will instead have prices form a double top at the highs, fail to break the highs and move lower. Here is your entry signal, or, again if you are a less aggressive trader wait for the prices to break point 2.

Spread-betting long:

There are two buy scenarios:
A) 123 – Higher Low
This scenario is when prices have been falling making Lower Lows and Lower Highs. At the end of the downtrend the low does not make a new low, but makes a higher low. Now you can spreadbet long when prices fail to make a new low. A less aggressive trader will wait for the prices to move higher past point 2 then he buys.

B) 123- Double Bottom
In this scenario, at the end of the downtrend the low does not make a new low, but makes a double bottom, not breaking into new lows. This is a signal to trade long. A less aggressive trader will wait for the prices to move higher past point 2 then trade long.

Exit Rules:
Exit the trade either at target profit or when the opposite signal occurs, that is when the trend fails to continue and new highs or lows fail. Use your money management rules

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Price Action System-morning break out

Price Action System–morning break out

Forex Spread betting

There are many morning break out strategies you will find on the web. I have fount this one to be the most effective.

Time frame: 30 min
Tag: EURUSD
Indicators used : None
Charts used: EURUSD
Type:Trend Trade
Timeframe of trade: Day trade or Swing

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This strategy is very simple, but an advanced spreadbetting strategy as you do need a some trading experience. Look for the overnight range on EURUSD. The optimal setup is when the rage is under 1/3 of the average range and that the overnight range is either in the upper half or the lower half of the previous day’s range.
The overnight range is considered between 20.00 and 8 am UK Time(when the UK stock market opens). soon after the opening you will have big players come into the market and they will push the price in one or the other direction.

Wait for a break out of the overnight range. When there is a pull back towards the range, enter the trade in the direction of the pull back. Look at the example in Spreadbetting example 1:

In the Price action system above. The overnight range was between 1.3307 and 1.3268 . 39 point’s which is roughly 1/3 of the average range of EURUSD. This range formed near the low of the previous range. In the example above there is not a real pullback into the range but there is a strong pause at 1.3250. This pause is considered a pullback in price action.

Above is another Forex spreadbetting example of the morning break out strategy. In picture above, the price action has a retracement in the morning back to the resistance line that has become support. This is where you enter the trade.
You only trade one trade a day, on the optimal setup. If you are a more aggressive trader you could use a stop and reverse strategy.

Exit Rules:

Your profit target is 2/3 of an average day range or target of one full day’s range if you would like to keep it overnight.
Your stop loss is the middle of the overnight range. If after the breakout the trade falls back into range crossing the middle of the overnight range. There is a greater chance that the trend will be in the opposite direction, to the current breakout. Therefore this is your stoploss are.

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